There is no single set of requirements that applies to every SME loan in Singapore.
Different banks and financial institutions have different company vintage requirements, industry criteria, credit policies and financing limits. A business that qualifies with one lender may not necessarily qualify with another.
The basic requirements are relatively straightforward. The more important question is whether your company’s profile fits the lender and financing facility you are applying for.
What are the basic requirements?
Depending on the financing facility, a typical SME loan application will require a business to have:
- A Singapore-registered company carrying out legitimate commercial activities
- Sufficient operating history for the lender to assess the business
- Active business revenue and transaction history
- A suitable ownership structure
- Directors or shareholders who can meet the lender’s Personal Guarantee requirements, where applicable
- Financial information and supporting documents required for credit assessment
Some financing schemes also have their own eligibility requirements.
For example, the Enterprise Financing Scheme (EFS) has specific criteria relating to local shareholding and enterprise eligibility for its respective financing facilities.
Meeting these basic requirements does not guarantee approval. The lender will still assess the company’s overall financial position and credit profile.
Company vintage is one of the first things banks check
There is no single minimum company age that applies to every SME loan.
Banks have their own vintage requirements, and these can vary depending on the financing facility, the company’s profile and the industry it operates in.
Some lenders may be more flexible with newer businesses, while others require a longer operating history before they will consider financing.
For certain industries, some lenders may have longer operating-history requirements before they consider particular financing facilities. Depending on the lender and facility, this can mean the business needs to have been operating for several years.
Other lenders may have shorter vintage requirements.
This is why a company should not assume that being too young for one bank means it is too young for every bank.
At the same time, having six months of bank statements does not automatically mean a company qualifies. The relevant lender’s actual vintage requirement still applies.
Your financials matter
Once the company meets the relevant vintage and basic eligibility requirements, the lender will assess the financial strength of the business.
This generally includes looking at:
- Revenue and business activity
- Profitability and margins
- Bank statement conduct
- Existing loans and liabilities
- Cash position and balance sheet
- Overall financial trend
Revenue is important, but it is not the only number that matters.
For example, two companies may have similar annual turnover but very different levels of profitability, existing debt and cash reserves. Their borrowing capacity can therefore be very different.
The lender is ultimately trying to determine whether the business can reasonably support the proposed financing.
Your industry can affect which banks you can approach
Industry is another important consideration.
Different lenders have different lending appetites, and some industries may have:
- Longer minimum vintage requirements
- More restrictive credit criteria
- Lower financing appetite
- Specific facility restrictions
- Internal industry exclusions
This means a company’s industry and vintage need to be considered together.
A relatively young company in an industry with stricter lender requirements may have fewer financing options than an equally young company operating in an industry that more lenders are comfortable with.
This is one of the reasons why there is no universal answer to:
“How old does my company need to be before I can get a loan?”
The answer depends on which bank, which facility and which industry.
Personal guarantee requirements
Many SME financing facilities require directors or shareholders to provide a Personal Guarantee (PG).
A Personal Guarantee should not be confused with collateral.
A facility can be non-collateralized, meaning the company does not pledge property or other assets as security, while the lender may still require a director or shareholder to personally guarantee the facility.
Where a Personal Guarantee is required, the lender may assess the relevant individual’s financial and credit profile.
The exact requirements vary between lenders and facilities.
How much can you qualify for?
There is no fixed formula that determines an SME’s financing quantum simply from its annual revenue.
The lender may consider the company’s:
- Financial performance
- Existing borrowing
- Company vintage
- Industry
- Credit profile
- Ownership and Personal Guarantee structure
- Purpose of financing
- Requested financing amount
The lender’s own credit appetite also matters.
This is why the same company can receive different financing outcomes from different banks.
One lender may be comfortable with a particular quantum, while another may offer less or decide that the case does not fit its criteria.
What documents will you usually need?
The exact documentation depends on the lender and facility, but an SME financing assessment commonly involves:
- ACRA BizFile
- Recent company bank statements
- Latest available Profit & Loss and Balance Sheet
- Personal Notice of Assessment (NOA) where required
- Identification documents for relevant directors or shareholders
- Details of existing financing facilities
- Additional documents depending on the business and financing requirement
The purpose of these documents is to give the lender enough information to assess the business properly.
What if your company does not meet one bank’s criteria?
This is where lender selection becomes important.
If your company does not meet one bank’s vintage requirement, industry criteria or other internal requirements, another lender may have a different position.
However, that does not mean another bank will automatically approve the application.
The correct approach is to assess the company’s profile first and determine which financing routes and lenders are actually worth considering.
This is also why repeatedly submitting the same application to different banks is not necessarily a good strategy.
Different lender does not always mean different outcome if the underlying issue has not been understood.
What if you have been rejected before?
A previous rejection does not automatically mean the business has no financing options.
The important thing is to understand the reason for the rejection.
It could relate to:
- Company vintage
- Industry
- Financial performance
- Existing liabilities
- Credit profile
- Financing quantum
- Lender-specific criteria
Once the reason is understood, the case can be assessed properly to determine whether another financing route may be more suitable.
How we assess an SME financing case
At Cornerstone Capital Services, we assess the business first and the lender second.
We look at the overall profile of the company, including its operating history, industry, financial performance, existing facilities, ownership structure and financing requirement.
From there, we determine:
- Which financing facilities may be suitable
- Which lenders may be appropriate
- What quantum may be realistic
- Whether there are issues that should be considered before submission
- How the application should be structured
The objective is not simply to find a bank that will accept an application.
It is to identify a financing route that fits the company’s actual profile and funding requirement.
Speak to us about your financing requirements
If you are considering SME financing and are unsure whether your company qualifies, we can assess the case before you start submitting applications.
Send us your company name, approximate financing requirement and purpose of funding.
We can review the overall profile and determine which financing routes may be worth considering.
The right question is not simply “Can my company get a loan?”
It is “Which financing options and lenders are actually suitable for my company?”
